CHAPTER 11
ECONOMIC TRENDS AND CONDITIONS IN THE SIXTEENTH CENTURY

It is difficult to generalize about the European
economy in the sixteenth
century. Conditions varied considerably from one area to another; and, although
there were forces that were everywhere at work, their intensity and their impact
differed as they affected different regions. Similarly, there were temporal
variations; conditions changed with the passage of time, and the timetable varied
from one area to another.

Keeping these facts in mind, we may make some general statements. The
sixteenth century was on the whole a time of economic expansion for Europe.
The depressed conditions that had prevailed from the middle of the fourteenth
century were giving way, and the growth before 1350 was being resumed. One
sign of this expansion, as well as a cause of it, was a growth in population. By
the sixteenth century, the ravages of the Black Death and its recurrences were
being made up, and the overall population of Europe had reached its 1350 level
and was increasing beyond that point.

The general statement that the sixteenth century was a period of economic
expansion needs to be qualified by the recognition that not all areas witnessed
the same degree of growth; in some, indeed, the overall picture is one of
recession. The economy of Europe was becoming truly European. What happened in
one country affected others, and wise businessmen kept abreast not only of
economic activities and problems in the various parts of Europe but also
of the numerous other factors that might affect their businesses. These factors
included the political, diplomatic, and military situations; dynastic
arrangements, including such matters as marriages among ruling families; and, as
the split in the church became deeper, religious matters.

Other important influences were the voyages of discovery and exploration. Here
again the impact was different for different countries. One of the effects of the
voyages undertaken by the Portuguese, Spanish, English, French, and Dutch was to
hasten the process that had produced them the process, that is, whereby the
nations of the Atlantic seaboard took the place of the Italian city-states as the
chief factors in European trade and economic life in general. Until this time,
Europe had always centered on the Mediterranean; it was the Mediterranean that
was the great axis of trade and civilization, or else the great barrier across
which Christendom faced its enemies. Though it did not cease to be important, a
profound and apparently irrevocable shift in relationships was taking place, and
Europe was beginning to face the Atlantic seaboard. The Italian city-states, by
their failure to unite with one another were becoming the battlegrounds and
dependencies of the great western nations, particularly Spain; and their economic
greatness was passing. The change was gradual; Venice remained a great state, and
Genoese merchants and bankers played a significant part in the Spanish economy.
But the future lay elsewhere.

From the Spanish Empire in the New World came an influx of precious metals,
which had profound economic effects. The flow became especially important in the
second half of the sixteenth century, and consisted of both gold and silver, with
the latter metal predominating. The Spanish went to great lengths to secure the
entire supply for themselves and prevent any of their precious cargoes from
falling into the hands of their rivals. Each year the plate fleet, bearing the
bullion from the mines of Peru and Mexico, was accompanied to Spain by a convoy
of warships, and during the sixteenth century no other nation ever succeeded in
intercepting this fleet. Francis Drake was able, however, to rob Spanish treasure
in Central America and in the Pacific.

In the middle of the sixteenth century great deposits of silver were
discovered
in Mexico and Peru; in the latter region were the great mines of Potosí,
in the area of modern Bolivia. A new method of extracting the silver from the ore
was developed, and the amount of silver reaching Spain became very great. It was
this bullion, which to a great extent, made possible the foreign and imperial
policies of the last years of Charles V and the reign of Philip II. Because of
these ambitious and costly policies, it proved impossible to keep the gold and
silver in Spain. Much of it was spent to support activities that were not
directly related to Spanish affairs, since both Charles and Philip had extensive
interests outside the country. It was also necessary to export the precious
metals to pay for manufactured goods, because of the neglect of Spanish industry.
Spain also was compelled to import agricultural products throughout the century.
Various causes combined to harm Spanish agriculture.

The mistreatment of the Moriscos (See Chapter 18), who had been the chief
agricultural workers in the country, was a serious blow. Another harmful
influence was the favor shown to the mesta, the association of sheep-growers of
Castile. Since the mesta was a prolific source of tax revenues, the Spanish
monarchs adopted the shortsighted policy of favoring the sheep-growers at the
expense of the farmers. Add to this the fact that only about 45 percent of the
soil of Spain is even modestly fertile, while only 10 percent can be described as
rich, and it becomes clear why Spain was importing wheat from early in the
sixteenth century.

The massive flow of specie accompanied what has come to be called the Price
Revolution a rise in prices that took place all over Europe, even though it was
higher in some countries than in others. This inflationary trend was especially
marked in Spain and undoubtedly was connected with the influx of gold and silver.
The connection between the quantity of gold and silver in circulation and the
rise of prices was not immediately seen, but during the second half of the
century certain thinkers became aware of the connection. The earliest was a
group of men connected with the Spanish University of Salamanca; better known is
the versatile Frenchman Jean Bodin, whose work was much more widely known and who
made popular the idea that the price inflation was the direct result of the
increase in the money supply.

The same idea has been put forward, in a much more elaborate and technical
form, in the twentieth century, but it has been challenged in recent years and
can no longer be accepted without serious modifications. The influx of gold and
silver may now be looked on as one factor in the Price Revolution, but far from
the only one. Of the others, perhaps the most important was the growth in
population.

The example of Spain shows that a simple increase in the amount of money was
not necessarily beneficial. However, in countries where agriculture and industry
were in a more flourishing state, and in which the demands of war and foreign
policy were not so all-consuming, the increase in the money supply acted as a
stimulus to economic activity. Even in such cases, however, its effects were
unevenly distributed among the various social classes. Wages rose more slowly
than prices, and wage earners did not share in the benefits of economic expansion
as did their employers, especially the great capitalists.

For centuries capitalism had been emerging in many fields, and this process
was continued, and accelerated, in the sixteenth century. Here again, different
sections of the economy and different parts of Europe were affected in varying
ways and at varying rates of speed. For our purposes, capitalism may be defined
as a system in which enterprises are not controlled by those who supply the
labor. The greater guilds of Florence are examples of capitalism long before the
sixteenth century, and numerous other examples can be found in Italy, the Low
Countries, and throughout western Europe. Moreover, certain types of enterprise
that required substantial resources and that were conducted on a large scale,
with the concomitant risks, were inevitably capitalistic. This is true, for
example, of shipbuilding and international trade. The printing industry, which
existed in Europe from the fifteenth century, was essentially capitalistic, at
least in the case of the more stable and successful firms. Mining was necessarily
a capitalistic enterprise.

Even agriculture, the most conservative branch of economic life, the one that
responds most reluctantly to change, was becoming capitalistic in the sixteenth
century. The enclosure movement in England exemplifies this trend. The term
enclosure refers to the enclosing of the open fields and common lands by means of
fences or hedges and converting them to grazing lands for sheep. This process was
stimulated by the great demand, both domestic and foreign, for English wool. It
was this process that brought forth the protest of Thomas More in the Utopia
about lands in which sheep eat men. There was some social dislocation caused by
enclosures; fewer men were required to take care of sheep than were needed for
raising crops, and, therefore, enclosures forced many peasants off the land and
made them vagabonds, sometimes criminals. Such persons were subjected to severe
punishments at the hands of the law in an age that lacked the modern
understanding of social change and its victims.

Wool had been the chief article of export for England since the thirteenth
century, but by 1500 a shift had occurred. For a long time it had been raw wool
that the English sent abroad to be processed into woolen cloth in foreign
countries. However, the native English woolen manufacturing industry had been
developed to the point where it was now woolen cloth that constituted England's
chief export. All woolen cloth going to the Continent passed through Antwerp,
which was, therefore, the staple port for this product. It was handled by the
Merchant Adventurers, a group of wealthy merchants from various cities in the
kingdom, especially London. For the raw wool England still exported, the staple
port was Calais still in English possession in 1500 and it was handled by the
organization known as the Merchants of the Staple. For high grade wool, England's
chief competition was Spain, where the mesta, as we have seen, dominated the
rural economy. The prosperity of the Spanish sheep-growers was based on the wool
of the Merino sheep, which had first been imported into Spain from North Africa
about 1300. Wool was one of the chief articles of trade and manufacture
throughout western Europe. The Florentine economy, as previously noted, was
largely based on it; and the textile manufactures of the Low Countries continued
to be important. Sometimes the names of familiar articles of use can remind us of
the places that originally specialized in such articles. For instance the city of
Ghent (in French Gand) made and exported gloves, and our word gauntlet preserves
this connection.

The enclosers - the men who made their land into pastures for sheep - were
capitalists. They employed labor, produced for an international market, and
reaped the profits. The English textile industry shows the advent of capitalism
in a different field. It manifested itself in the so-called putting-out system.
Here the leading figure the capitalist was the merchant who bought the raw
material, which he then distributed put out to the craftsmen who performed
the various operations required to transform it into finished cloth, and then
sold it on the market for a profit.

This system was also known as the domestic system, because the various workers
- carders, fullers, spinners, weavers and so forth - worked in their homes. In
other places, as in Florence, textile manufacture was carried on by means of a
sort of factory system, with the workers gathered together in large workshops.
The difference here is related to differences in the respective position of the
guilds. In Florence the greater guilds such as the Arte della Lana, or wool guild
were great capitalistic organizations that dominated economic and political life.
In England, however, as in some other places, the guilds were chiefly concerned
with maintaining their exclusive local privileges and preventing competition
among their members, and consequently acting as a restraint upon the expansion of
trade and industry.

To circumvent these restraints, the textile capitalists found their workers in
rural areas, outside the cities where guilds controlled the economy. This led in
some areas to a decline of the guilds and of the prosperity of the towns in which
guilds were especially strong. This was not true everywhere; in some places
guilds were growing stronger. In France, before the end of the sixteenth century,
the crown ordered all craftsmen to belong to guilds. In this way the
government, by controlling the guilds, could tighten its hold on the economy.
One of the most important, long-term economic and social trends, which had
been going on for centuries, was the decline of serfdom. For this there were
numerous reasons. To open up new lands, as in the "Drive to the East,"
inducements had to be offered to peasant cultivators, and freedom was used as
such an inducement. The rise of towns, already noted, often had the effect of
giving freedom to serfs who escaped from the land and took refuge within the town
walls. The labor shortage that followed the Black Death in many areas enhanced
the bargaining position of the peasants who survived, and enabled many to secure
their freedom.

The development of trade and the increased circulation of money worked in
the same direction. As more products from distant places became available,
manorial lords began to desire money with which to buy them, and to obtain it
they were willing to commute the obligations of their peasants from services and
payments in kind to money rents. The manorial lord thus evolved into a landlord,
while the servile peasant became a rent-paying tenant. The increased circulation
of money here helped the peasant by providing him with the ability to pay his
rent. As for the landlord, he could get his work done by hired labor, which might
prove economically more profitable than the old manorial services. As a result,
serfdom declined very widely in the West though not everywhere and this
development was most pronounced in the same areas in which economic development
had progressed the most. In eastern Europe, including Russia, where society was
overwhelmingly agrarian and dominated by noble landowners, a contrary trend was
taking place; and the social and legal position of peasants was being
depressed.

Accompanying the changes in commerce, industry, and agriculture and to some
extent making them possible was the continued growth of banking and finance. The
greatest financial power of the sixteenth century was the house of Fugger in
Augsburg. The history of its rise is in itself a sort of synopsis of the
development of the European economy.

The founder of the family fortunes was Hans Fugger, a weaver who in about 1367
came to Augsburg from the countryside, where he had probably worked under the
domestic system for an Augsburg merchant engaged in international trade. In the
city, he expanded his activities, importing cotton and selling cloth made by
himself and by other weavers. Soon he began to trade in other wares, and the
business was continued by his descendants. They dealt in fruits, spices, and
jewels as well as textiles, and they became involved in dealings with the
Hapsburgs and with the papacy. The greatest of the Fuggers was Jacob Fugger II,
called Jacob Fugger the Rich (1459-1525). Though the business was already
prospering when he took it over, he greatly expanded it. From 1511 to 1527, under
his direction, the capital of the business rose tenfold (from 196,791 gulden to
2,021,202). The greatest of Jacob's interests was mining. The family had become
involved in this field as early as 1481, when in return for a loan to a member of
the Hapsburg family, they received mining rights in the Tyrol. The mining
activities of the Fuggers increased in the time of Jacob, who profited in this
respect from the favor shown him by Emperor Maximilian I. He enjoyed important
rights in the silver and copper mines of the Tyrol, the chief source of these
metals before the opening up of the mines in the New World. The Fuggers also
acquired complete control of the copper production of Hungary. In addition to the
mines, they owned the plants that processed the ore, and employed hundreds of
workers. Jacob Fugger attempted, though unsuccessfully, to achieve a world
monopoly in copper and to use his monopoly to keep prices high. He was a Catholic
as a young man he had planned for a while to be a priest and did much business
with the papacy. He completely controlled the financial relationships of the pope
with Germany; this included a monopoly on sending to Rome the proceeds from
indulgences. In this way the activities of the Fuggers were at least indirectly
connected with the early career of Martin Luther. Because of his importance to
the papacy, Jacob was able to influence the appointment of bishops.

With his far-flung interests, it was necessary for him to be informed of
events
throughout Europe. He had agents in all the main business centers who supplied
him with a constant flow of information, which has been compared to a press
service. Contemporaries, aware of his wealth and power, were frequently opposed
to him. There was a great deal of public sentiment that would have supported
legal restraints against the power of the great merchants, but Jacob Fugger was
protected by the favor of Charles V, to whom he was very valuable, even
indispensable.

It was his relationship with Charles that involved Fugger in the most famous
event of his career. When Charles became a candidate for the throne of the Holy
Roman Empire upon the death of Maximilian I in 1519, he borrowed a great
deal of money from the Fugger bank in order to influence the electors in his
favor. It was generally believed that these loans were responsible for his
success in being chosen emperor. This is shown in an extraordinary letter of 1523
from Fugger to the emperor, in an attempt to collect the money Charles owed him.
In the letter Fugger plainly states that without his help, Charles might not have
been elected. As security for the loan, and for later loans to the emperor,
Fugger received some of the revenues of the Spanish crown. Three great Spanish
religious orders were under the control of the king, and for over a century the
house of Fugger controlled the income from their property, which included large
agricultural holdings and mercury mines.

Under Jacob's nephew Anton the firm reached its height, with a capital of
about five million gulden by 1546. However, the connection with the Hapsburgs
proved fatal in the end to the prosperity of the house. Later in the century and
in the succeeding one, the Hapsburgs were unable to meet their obligations, and
most of the firm's money was lost. Yet the career of the family, and especially
of Jacob Fugger, clearly indicates that the power of capital was making itself
felt. In some ways, Jacob was the most powerful man of his time.

The career of Jacob Fugger also set in relief the importance of political
factors, especially the state, in the economic life in the sixteenth century. As
the national state was asserting its involvement in, and control of, numerous
fields of human endeavor, its activities more and more affected economic
activities as the governments sought, wisely or otherwise, to direct economic
life for the increase of national strength.

The emerging nations suffered under handicaps in managing economic policy. One
of these lay in the fact that their financial needs had outgrown their ability to
meet them; that is, a system of raising money that had been devised to meet the
needs of a more or less decentralized feudal society was inadequate for the
expanded requirements of the larger and more concentrated units of political
power that were now becoming dominant. This problem was aggravated by the
general ignorance of economics and public finance.

These factors combined to bring about such expedients as debasing the coinage,
which proved to be harmful to the economies of the countries concerned. During
the Hundred Years' War, the French crown had resorted on numerous occasions to
this practice. In sixteenth-century England, Henry VIII did the same thing, and
it was not until the reign of Elizabeth I in the second half of the century that
the coinage value was restored. Such a policy militated against a country's
prosperity; in the case of England it helps to explain why, in spite of
encouraging developments in trade, industry, and agriculture, the country
suffered from more or less depressed economic conditions for much of the
century.

Perhaps the most obvious way in which political events affected the economy
was through war. The wars of the sixteenth century, as will be seen in subsequent
chapters, were frequent; international conflict and civil struggle fill the
history of the period and had a tremendously destructive effect. A few examples
will illustrate the point. The Sack of Rome in 1527 and the Sack of Antwerp "the
Spanish Fury" of 1576 were terrible blows to the cities affected. Antwerp had
been one of the greatest centers of trade and finance; indeed, it had stood as
the key city in the European economy. After the Sack of 1576 although there were
additional factors it never regained its former position.

Similarly, the wars of Charles V and Philip II of Spain, although they were
not fought on Spanish territory, were financed largely by Spanish, and in
particular by Castilian, resources. They had the effect, again combined with
other factors, of directing the resources of Spain to unproductive uses, of
stifling the development of the economy, and of preventing prosperity. The
decline of Spain from its status as one of the great European powers, a decline
from which it has never recovered, was the result of this as much as of any one
factor. Those countries that enjoyed an abundance of resources and basic economic
strength recovered from the damage done by war. The revolt of the Netherlands was
costly to Spain and to that part of the Low Countries that remained under Spanish
control, but the new nation of the United Netherlands or Dutch republic went on
to become one of the most prosperous of the European states in the next century.
The French Wars of Religion were among the most terrible of the century because
they were primarily civil wars, and they caused great devastation; but France
was, nevertheless, to become the dominant power in Europe in the seventeenth
century.

In a general sense, the growth of the nation-state, with increasingly unified
control over a territory larger than that of earlier political units, responded
well to the needs of the expanding economy and formed mutual alliances between
monarchs and merchants. Rulers and businessmen had a common interest in peace and
security, in breaking down local and regional restraints on the movement of
goods, and in subduing the nobility. It may be said that kings identified
themselves socially with the nobles, since they were of the same class; and that
the wealth of the great nobility depended largely on the favor of their rulers,
who often endowed them with rich estates to enable them to maintain their social
prominence. At the same time, when it came to political power, monarchs quite
often took care to keep their greatest nobles out of positions of power and to
choose as their closest advisers men of undistinguished origin whose position
depended entirely on royal favor.

For example, two of the most important advisers of Henry VIII of England were
Thomas Wolsey, son of a butcher and innkeeper, and Thomas Cromwell, whose father
was a brewer, blacksmith, and fuller. Philip II of Spain followed the policy of
using great nobles for positions that took them out of the country, preferring to
appoint professional men and priests to positions of importance nearer home.
Philip's father, Charles V, had relied for many years on a man of humble origin,
Francisco de los Cobos, as the chief figure in the Spanish administration. In
France, where the old nobility noblesse dépe, or the nobility of the sword
did remain important, it was supplemented by the noblesse de robe or nobility of
the robe men of middle-class extraction who owed their noble status to judicial
office. In England, the gentry, a class of non-noble landowners, was becoming
dominant in the nation's affairs; one sign of their increasing importance is
found in the fact that members of this class formed the great majority of the
House of Commons.

What the members of the non-noble business, professional, and landholding
classes had to offer their rulers was not only loyalty and service but also
money.
Methods of acquiring money available to the monarchs of the time were
primitive. Taxation was in its infancy and was not yet regarded as the chief way
to acquire funds for the conduct of public business. In England the monarch was
expected to "live of his own" that is, to meet expenses with such resources as
the income of crown lands and the receipts from customs duties. In time of war
or other critical situations, Parliament might be induced to grant taxes, but
there was a limit to its willingness to part with money. In France, the taille, a
combined income and property tax, was levied throughout the country, but the
rate varied. In the more recently acquired provinces, where representative
bodies estates still existed, these estates served as a means of protecting the
inhabitants of their provinces against excessive royal demands, and the taille
had to be negotiated annually between the royal officials and the estates. Where
the estates no longer survived, the taille was levied directly on the defenseless
inhabitants, and the rate was higher.

Fiscal burdens were often unequally distributed. In France, the First and
Second Estates clergy and nobility respectively were privileged classes, which
means that they were exempt from many of the payments required of the bulk
of the population. The French church sometimes granted the king a "free gift,"
which was a good deal less than it would have paid if the wealth of the church
had been taxed at the rate levied on the unprivileged. In Castile, which supplied
the bulk of the revenues of the king of Spain, the nobles and clergy achieved the
goal of exemption from taxes in the reign of Charles V, and stopped attending
the Cortes the representative assembly so that only delegates from the towns
continued to be present at meetings. Deprived of the support of the other
classes, these townsmen were not strong enough to put up a successful resistance
to the steady growth of royal power.

Thus tax systems were defective for various reasons. Another problem that
arose in connection with raising taxes was that much of the revenue tended to
remain in the pockets of officials engaged in the collection process. One of the
reforms of Sully, the finance minister of Henry IV of France at the end of the
sixteenth century, was to take measures that would suppress this sort of
speculation and bring the royal revenue to the royal treasury. There were
consequently numerous reasons why the tax structures of the European states
failed to meet their expanding needs and why various other expedients, generally
unhealthy, were tried. Reference has already been made to the debasement of
coinage. Another was the sale of titles of nobility. A good or bad example of the
results of this practice is found in the experience of France, where the sale of
titles came in the sixteenth century to be carried on extensively. For centuries
thereafter, individuals of the middle class who had succeeded financially sought
to rise socially by buying their way into the aristocracy. This was fiscally
disadvantageous in the long run, because elevation into the privileged ranks of
the nobility also meant a large degree of exemption from taxation. In this way,
many persons who were especially well qualified to contribute to the financial
support of the state were relieved of the necessity of carrying their fair share
of the burden.

Not only titles but also offices were sold. Here again the case of France is
especially instructive. It was customary by the sixteenth century for judicial
offices not only to be sold, but also to be passed down from generation to
generation in the same family. In 1604 this practice received official status
when a tax, called the Paulene, was imposed at the time an office was
transferred. Thereafter an annual fee was paid that made the office virtually the
property of its holder. Interestingly enough, this did not create a body of
mediocrities holding positions for which they were not fitted because the jobs
had become family possessions. On the contrary, there came to exist distinguished
legal families, proud of their status, competent, and conscientious in carrying
out their professional and official duties. Nevertheless, the practice of selling
offices came in time to create a vast body of functionaries with overlapping
positions, who had bought their posts and intended to recoup their investments at
the expense of the citizenry. This oversized bureaucracy also came to hamper the
crown and complicate the problem of efficient government.

Some taxes in France were farmed; that is, the right to collect them was sold
to corporations of tax-farmers at a fixed sum. The tax-farmers, having bought the
privilege of collecting the tax, were primarily interested in making a profit,
and they were pretty much given a free rein in doing so. In fact, the coercive
force of the state was at their disposal in dealing with recalcitrant taxpayers.
These tax-farmers were often guilty of extortionate practices in squeezing money
from the hapless French taxpayer, who, it must always be remembered, was a
peasant or a town dweller of either the working class or middle class,
unprotected by noble or clerical status.

We have had occasion to note that governmental officials and functionaries
quite generally managed to acquire for themselves some of the funds that should
have gone into the public treasury. This sort of corruption, or graft, was so
widespread that it is almost unfair to refer to it in such unflattering terms.
Public officials, at least in some cases, were more or less expected to reward
themselves from pubic funds. Cardinal Wolsey, a man of modest origin as we have
seen, acquired wealth of vast proportions; the magnificence with which he
surrounded himself excited the envy of the great nobles of England, and he even
ventured, very imprudently, to rival the king himself in the lavishness of his
entertainments and banquets. In the following century, Cardinal Richelieu,
whose family was not a wealthy one, left so large an estate at his death in 1642
that his will was several pages long. Indeed, Thomas More and Niccol
Machiavelli, so different from one another in many respects, were alike in that
they could both truly assert that they had not profited financially by holding
public office; each seems to have realized that he was different from his
contemporaries in this way.

In the field of commerce, governments were involved from a number of angles.
Customs duties, on both imports and exports, were used both to regulate trade and
to add to revenues. Organizations of merchants were encouraged by governments,
and officials of government often associated themselves with mercantile
enterprises by investing in them. The companies that were being formed to open up
and carry on trade in the newly discovered parts of the world received charters
from their governments that assured them of monopolies on the trade of specific
areas. In England a number of companies of this nature were formed during the
sixteenth century. The Cathay Company, chartered in 1576 for the Chinese trade,
failed. Others were more successful: the Muscovy Company (1555) for the trade
with Russia; the Eastland Company (1579) for the Scandinavian and Baltic trade;
the Turkey Company (1581), later known as the Levant Company; and, most famous of
all, the English East India Company, chartered in 1600, which was to have a long
and amazing career. The new Dutch republic formed its own East India Company in
1602. Numerous other companies were chartered by these governments and others for
a long time to come and enjoyed varying degrees of success.

The companies were formed on the joint-stock principle, which had been
familiar in Italy for centuries, but which was adopted in northern Europe in the
sixteenth century. By this arrangement, ownership was divided into shares of
stock, which could be purchased in small or large quantities. Each individual
shareholder was an owner of the company in proportion to the number of shares
he held. The shareholders chose the officers and directors of the company who
carried on business on behalf of the membership. This form of organization had
numerous advantages over earlier ones. It made it possible for a larger number of
persons to participate in mercantile enterprise, including many who could
never have done so on their own; it facilitated the accumulation of large
quantities of capital; and it lessened individual risk. In the older partnership
form of organization, each partner had unlimited liability for the losses and
debts of the firm. In seeking out and exploiting trade opportunities, joint-stock
companies did important work in exploring new lands and sometimes in the fields
of conquest, settlement, and government. Students of the history of the United
States and of India will be familiar with this fact.

By the sixteenth century, it may be said that a European economy had emerged
in which the various parts of Europe were bound together by an intricate network
of economic and financial relationships. During the first half of the century and
part of the second, the city of Antwerp was the financial and commercial center
for the European economy, showing once again how the economic center of gravity
had shifted from the Mediterranean to the Atlantic. When the preeminence of
Antwerp became a casualty of the war for Dutch independence, its place was taken
for a while by Amsterdam and later by London.

The sixteenth century saw not only the rise of new economic powers but also
the decline of old ones. In addition to the gradually decreasing importance of
the Italian city-states, the period also witnessed a falloff in the power and
position of the Hanseatic League, or Hansa towns. This was an organization of
cities in northern Europe, formed for the purpose of carrying on trade; it had
been one of the great powers in the fourteenth and fifteenth centuries. It
secured special trading privileges with numerous countries, fought wars to
maintain its privileges, and had settlements of merchants from London to
Novgorod. The chief city of the league was Lübeck, but many other great
cities belonged to it. It could flourish only in a period when central
governments in some areas were weak enough to permit the existence of virtually
self-governing city-states. With the rise and consolidation of the nations of
Europe, its decline was inevitable. By the sixteenth century its greatest days
were over, though many causes contributed to its decline and the decline did not
come suddenly. Something of the atmosphere of the Hanseatic towns as it came down
to our own century is preserved for us in the writings of a descendant of the
prosperous merchant class of a Hanseatic city, Thomas Mann.